Adcock reports resilient performance under COVID-19 with over US$500 million turnover

SOUTH AFRICA – South African leading pharmaceutical manufacturer Adcock Ingram has reported an increase in turnover by 6% to R7.8 billion (US$521.5 million) despite the effects of the COVID-19 pandemic.

All divisions, with the exception of the Over-the-Counter (OTC) business unit, which is the largest cough, colds and flu company in South Africa, posted good growth in sales.

The Consumer division, which now includes a full year’s contribution from the Plush shoe and household care business, increased its turnover by 42% to R1.3 billion.

The Group experienced good demand for immune-boosting products, and certain small-volume parenterals and acute renal dialysis products associated with the treatment of COVID-19. The general absence of colds and flu, saw sales in the OTC business unit declining by 15%.

The gross margin decreased from 37% to 34%, driven by a 9% depreciation of the Rand against the US Dollar and Euro, directly affecting the cost of imported goods, and a higher proportion of anti-retroviral products (ARV’s) in the sales mix.

Reduced demand in OTC products also resulted in lower factory recoveries at the Clayville factory. Pro-active cost-saving initiatives implemented at the start of the COVID-19 pandemic resulted in the Group achieving a like-for-like reduction of 6% in operating expenses.

Headline earnings decreased by 5% to R671 million, which following the Group’s share repurchases during the year, translated into a decrease of 3% in headline earnings per share.

Adcock Ingram manufactures, markets and distributes a wide range of healthcare and consumer products, and is a leading supplier to both the private and public sectors of the market.

Adcock Ingram provides an extensive portfolio of branded and generic medicines. It also has a strong presence in over-the-counter brands, and is South Africa’s largest supplier of hospital and critical care products. The Company’s mission is to provide quality products that improve the health and lives of the people in the markets that we serve.

In June, the company reported a 1.2% increase in headline profits to almost R710 million for the fiscal year. The company grew its over-the-counter sales by almost 2% to more than R2 billion thanks to double-digit growth in sales of Corenza C and Allergex.

However, the lack of SA’s flu season impacted sales of medicines which are usually in hot demand this time of year.

Also, its sales of prescription medicines were under pressure as fewer South Africans went to the doctor during the lockdown period, and elective surgeries were postponed.

On the other hand, their biggest competitor, Aspen pharmaceutical group project an increase of up to 7% in their profits for this year.

Aspen says that it benefited from a demand for its clinical products to treat Covid-19, as well the “stockpiling of everyday healthcare products” ahead of the lockdown. But this was more than offset by delays in the recovery of elective surgeries during the pandemic and the absence of a flu season in South Africa.

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